California faces multi-billion-dollar wildfires losses
A series of major wildfires burned across Northern and Southern California is anticipated to cause the insurance industry a multi-billion-dollar aggregated payout, according to Aon’s Impact Forecasting Cat Alert.
The overall economic cost – which includes uninsured damage to things such as infrastructure, the electrical grid, agriculture, forestry, etc. – is likely to be even higher, the report noted. Any percentage of underinsurance for properties would additionally be included in the overall damage cost.
A series of major wildfires burned across Northern and Southern California, as powerful offshore winds – known as Santa Ana winds in the south and Diablo winds in the north – helped spawn the blazes.
Downsloping winds off the Coast Range and Sierra Nevada mountains were critical in the fire ignition process. The deadly wildfires have forced hundreds of thousands of residents to evacuate.
The most catastrophic fire was the Camp Fire in Butte County, where the city of Paradise was largely destroyed. CalFire cited that 6,453 homes and 260 businesses were destroyed, making the Camp Fire the most destructive on record in California. The fire also left 29 people dead and many others unaccounted for; equaling as the deadliest fire on record in the state.
Additionally, the Woolsey Fire destroyed at least 177 homes and left two people dead in Ventura and Los Angeles counties.
The wildfire peril has become increasingly costly for the insurance industry in recent years. Annual insurance payouts (adjusted to 2018 dollars) have surpassed the $1 billion threshold just nine times since 1990. However, 2018 marked the fourth consecutive year of such an occurrence – even prior to the November wildfire events in California.
The historic 2017 wildfires in the US led to nearly $16 billion in insurance payments; almost entirely from the October and December events in California.
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